Traders work on the floor of the New York Stock Exchange on 22 January.
Photograph: Brendan McDermid/Reuters

Stock markets across the world fell Tuesday amid further signs that the global economy is weakening.

US markets dropped sharply following falls across Europe and Asia as the International Monetary Fund (IMF) trimmed its economic forecasts for 2019 and 2020 and pointed to risks including trade tensions and rising interest rates. China’s government said its economy grew in 2018 at the slowest pace since 1990.

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Technology companies skidded, and so did industrial companies, which were hurt by the slower growth forecast as well as some weak fourth quarter earnings. Bond prices climbed as investors looked for safer investments, and oil prices fell as traders expected weaker demand.

In London the FTSE 100 index slid 1% as Germany’s DAX and the French CAC 40 both gave up 0.4%. The European exchanges closed down following losses in Japan and Australia.

European investors were rattled by yet more uncertainty over Brexit – the UK’s planned exit from the European market. The prime minister, Theresa May, presented her plan B for Britain’s exit from the EU on Monday, but it looks a lot like the original and it’s not clear if she can win approval in parliament, which gave her previous plan a resounding “no” last week.

The EU has said it won’t renegotiate the deal that parliament already rejected.

Britain is scheduled to leave the EU in a little more than two months, and if Britain departs without a trade deal it could cause major hardships for numerous companies, especially banks.

In the US the mayor indexes ended down after four positive trading sessions. The S&P 500 index lost 37 points, or 1.4%. The Dow Jones Industrial Average slid 301 points, or 1.3%, and the Nasdaq composite fell 136 points, or 1.9%.

The IMF now says the global economy will grow 3.5% this year, down from its previous forecast of 3.7%. Managing director Christine Lagarde said the bank cut its estimate for growth in 2020 to 3.6% from 3.7%.

Earlier in the day, China reported its economy expanded by 6.6% in 2018. This was the slowest pace of growth since 1990 and it fueled fears a trade dispute with Washington is putting a drag on the world’s second largest economy.

“The IMF’s prognosis is fairly dire, and the prescription is a sensible approach of preventive management; to avoid escalating trade disputes, lower tariffs and build fiscal or financial buffers,” wrote Vishnu Varathan of Mizuho Bank in a note to clients.

Homebuilders sank after US home sales cratered in December and price growth declined to the lowest level in more than six years.